Tax And Regulatory - Sample Questions

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Tax Quizzes & Trivia

Sample Question Paper for Tax Proficiency Test (TPT)


Questions and Answers
  • 1. 

    A company is required to pay 75% of its advance tax liability by which date:

    • A. 

      15 March of the previous year

    • B. 

      15 December of the previous year

    • C. 

      15 September of the previous year

    • D. 

      15 June of the previous year

    Correct Answer
    B. 15 December of the previous year
    Explanation
    The correct answer is 15 December of the previous year. This is because companies are required to pay 75% of their advance tax liability by this date as per tax regulations. Advance tax is paid in installments throughout the year to avoid a large tax burden at the end. By paying 75% of the liability by December, companies can ensure they meet their tax obligations and avoid penalties.

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  • 2. 

    Capital Gains arises from the transfer of:

    • A. 

      Any asset

    • B. 

      Any capital asset

    • C. 

      Land only

    • D. 

      All assets other than land

    Correct Answer
    B. Any capital asset
    Explanation
    Capital gains arise from the transfer of any capital asset. This means that when a capital asset such as stocks, bonds, real estate, or other investments is sold or transferred, any profit or gain made from that transfer is considered a capital gain. It is important to note that not all assets are considered capital assets, and only the transfer of capital assets can result in capital gains.

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  • 3. 

    In the hands of the transferor, the transfer of capital asset by way of gift is:

    • A. 

      Taxable as income from Capital Gains

    • B. 

      Taxable as income from Other Sources

    • C. 

      Wholly exempt

    • D. 

      Exempt subject to certain conditions

    Correct Answer
    C. Wholly exempt
    Explanation
    The transfer of a capital asset by way of gift is wholly exempt from tax. This means that the person who is transferring the asset does not have to pay any taxes on the transaction. This exemption applies regardless of the value of the asset or any other conditions.

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  • 4. 

    Additional depreciation under Section 32(1)(iia) of the Income-tax Act,1961 is available to:

    • A. 

      Plant & Machinery only

    • B. 

      Plant & Machinery and Buildings

    • C. 

      Plant & Machinery and intangible assets

    • D. 

      All depreciable assets under the Income-tax Act, 1961

    Correct Answer
    A. Plant & Machinery only
    Explanation
    Additional depreciation under Section 32(1)(iia) of the Income-tax Act,1961 is available only to Plant & Machinery. This means that businesses can claim an additional depreciation deduction for the cost of acquiring new plant and machinery assets. This deduction is over and above the normal depreciation deduction allowed under the Income-tax Act, 1961. It is not available for buildings or intangible assets.

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  • 5. 

    Deduction of profit and gains derived from export under section 10AA available to SEZ units is for __________ years.

    • A. 

      10

    • B. 

      5

    • C. 

      8

    • D. 

      None of these

    Correct Answer
    D. None of these
  • 6. 

    If an assessee is rendering both taxable services as well as exempted services, what percent of exempted services can an assessee opt to pay, if separate books of accounts are not maintained?

    • A. 

      8 percent

    • B. 

      10 percent

    • C. 

      6 percent

    • D. 

      5 percent

    Correct Answer
    D. 5 percent
    Explanation
    If an assessee is rendering both taxable services and exempted services without maintaining separate books of accounts, they can opt to pay 5 percent of the value of exempted services. This means that only 5 percent of the revenue generated from the exempted services will be subject to tax, while the remaining 95 percent will be exempted from taxation.

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  • 7. 

    When does the liability to pay Excise duty arises?

    • A. 

      At the time of removal of goods from the factory

    • B. 

      At the time of manufacture of goods

    • C. 

      At the time of receipt of payment from the customer

    • D. 

      At the time of entry in the books of account

    Correct Answer
    A. At the time of removal of goods from the factory
    Explanation
    The liability to pay Excise duty arises at the time of removal of goods from the factory. This means that the duty must be paid when the goods are physically taken out of the factory premises. It does not depend on the time of manufacture of goods, receipt of payment from the customer, or entry in the books of account.

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  • 8. 

    Scripts of which of the following schemes can be purchased in the open market and be used to discharge Customs duty?

    • A. 

      Served from India Scheme

    • B. 

      Export Promotion Capital Goods Scheme

    • C. 

      Advance authorization

    • D. 

      Focus Market Scheme

    Correct Answer
    D. Focus Market Scheme
    Explanation
    The Focus Market Scheme allows exporters to purchase scripts in the open market, which can then be used to discharge Customs duty. This scheme aims to promote exports to specific markets and provides incentives to exporters. By allowing the purchase of scripts in the open market, it offers flexibility and ease of use for exporters to meet their Customs duty obligations.

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